Academy trusts achieve best financial performance since 2022 – but confidence remains fragile

Most trusts expect their reserves to fall steadily over the next two years, and the outlook for secondary Single Academy Trusts (SATs) is particularly challenging, with reserves projected to drop 43% by 2026/27.

The story behind this year’s surpluses suggests caution rather than recovery. Trusts benefitted from tighter budgeting and in-year funding they had not planned for, neither of which signals that financial pressures are easing. Staffing remains the dominant cost driver in 2024/25, staff costs accounted for more than 75% of income across all trust types, and 90% of trusts now identify rising staffing costs as a major concern.

The gap between large and small organisations remains significant. Large Multi-Academy Trusts (MATs) reported average surpluses of £1.1 million, while SATs and smaller MATs finished the year with average surpluses of under £50,000. This pattern is mirrored in reserves. Smaller trusts saw reserves fall from 13% of income to 11.5%, while larger trusts held steady at around 8%.

Although only 25% of trusts sit below the DfE’s 5% reserve threshold, the downward trend is clear. Smaller and secondary SATs in particular are operating with increasingly narrow margins, limiting their ability to absorb unexpected costs or invest strategically.

MATs did continue to grow during the year, now averaging just under 14 schools, up from just over 11. But future expansion plans have softened considerably. Last year, 61% of trusts expected to add at least one school in 2025/26, rising to 83% by 2026/27. This year, only 36% anticipate expansion over the next 12 months, a 25% point decline that reflects wider uncertainty.

Alongside staffing pressures, trusts are managing escalating costs for utilities, estate repairs and SEND provision. These sustained pressures are making long-term budgeting increasingly difficult and leaving little room for investment or contingency planning.

There were, however, some welcome boosts. Higher interest rates delivered stronger investment income, averaging £33 per pupil, rising to £39 per pupil in larger MATs. While this additional income has helped strengthen resilience, it is not expected to last and cannot counteract the structural pressures identified elsewhere in the report.

Taken together, the findings describe a sector that has delivered a stronger financial performance on paper yet remains wary of what lies ahead. Surpluses have risen, but reserves are set to fall. Growth is slowing, costs are rising and trust leaders are finding it increasingly difficult to plan with confidence. The underlying challenges facing schools have not eased and, without more predictable, sustainable funding, trusts may find themselves with limited capacity to plan, invest or grow in the coming years.

• Read the full 2026 Academies Benchmark Report

^{*the views expressed are the author's and not ICAEW's}